BAGHDAD, Iraq (CNN) --Sweeping away remnants of pre-war Iraq, Paul Bremer, the top U.S. civilian administrator in Iraq, on Friday dissolved the Iraqi Armed Forces, the ministries of Defense and Information, and other security institutions that supported Saddam Hussein's regime.

An American senior coalition official said the move effectively disbands the Army, the Republican Guard and the Revolutionary Command Council, among others, and cancels any military or other ranks conferred by the previous regime.

"These actions are part of a robust campaign to show the Iraqi people that the Saddam regime is gone and will never return," the official said.

It also puts an estimated 350,000 to 400,000 soldiers out of work, as well as an estimated 2,000 Information Ministry employees.

Military members of the rank of colonel and above will not be entitled to severance packages and cannot work for the new Iraqi government, once it is established. Any soldier below the rank of colonel would be eligible to enlist in a new army.

The official, who did not want to be identified, said personnel dismissed by the order would be given a termination payment equivalent to a month's salary.

"The Coalition Provisional Authority plans to create, in the near future, a New Iraqi Corps. This is the first step in forming a national self-defense capability for a free Iraq," the senior official said.

"Under civilian control, that Corps will be professional, non-political, militarily effective and representative of all Iraqis."

The order also suspends conscription and turns the property of the armed forces and other dissolved entities over to the Coalition Authority.

It also, according to the order, suspends all financial obligations of those ministries and organizations. The official confirmed that among the obligations put on hold are billions of dollars in debt from military purchases still owed by Iraq to countries such as Russia. He said the coalition was establishing procedures to deal with those claims.